Wednesday, January 30, 2013

“Because democracy is noble, it is always endangered. Nobility, indeed, is always in danger. Democracy is perishable. I think the natural government for most people, given the uglier depths of human nature, is fascism. Fascism is more of a natural state than democracy."

In last week's episode of the C-Realm podcast, KMO interviews the always-interesting author Charles C. Mann. Mann's latest book, 1493: Uncovering The New World Columbus Created, describes the results of what Alfred Crosby called "The Colombian Exchange," where the two halves of the world that were once separated by oceans were combined into a whole by the activities of human beings. Mann dubs this "The Anthropocene Era." KMO describes the settlement pattern of the New World as waves of colonialists coming to settle in the New World and dying in mass numbers, until eventually there are enough to sustain a new society. This leads to a discussion about whether or not the moral progress we've created over the past several centuries, things like trial by jury, the abolition of slavery, the rollbacks of capital and corporal punishment, the elimination of hereditary rule and the routine subjugation of women - will be preserved as we enter an era of decline.

“You have four older accountability arenas, four older arenas that were invented by the Enlightenment that brought about a cornucopia of what are called positive-sum games. Now, if there’s any concept that your listeners absolutely need, it’s that of the positive sum game…The positive sum game is one where we compete with each other, but our competition is now harnessed. Competition is the great creative force of the universe, and it made us through evolution, but it made us in ways we do not want to replicate in society because it was mostly death. Our ancestors were the few who managed to reproduce and survive, and that’s not so nice. And so we invented arenas where completion can bring about this positive sum game where new things are invented, and new discoveries are made, and things get improved, but the result of the competition is not blood on the floor, not corpses all over the place. And these four accountability arenas are: markets, democracy, science, and justice courts, and all four of them are incredibly competitive, especially science.”

“These four accountability arenas harness competition to create these positive sum games, and we’ve been refining them for 400 years. And what they do is, there’s a two-phase process. First, you have a place where can safely refine your product – your company, your political party, your scientific lab and tenure, attorney-client privilege. But then there is a call to battle, ritualized battle, a very tightly controlled, regulated battle in what are called markets, and in democracy, elections, the marketplace, the courtroom, the scientific conference, and these highly ritualized combats result in a growing consensus in models of what’s good, what’s accurate. And the main thing is, that there is death. Bad products die. Bad scientific theories die. Bad policies…well, we’re fighting that fight right now… But when democracy does work and we’re not in culture war, then bad policies die. The Congressional Research Service just showed that across sixty-five years there is not a single case of supply-side economics ever actually having come true or worked. It should then die.”

The host later asks David Brin what sort of predictions he's willing to make about the future.

“Oh, well, I’m not really sure of anything, but I believe that the biggest choice we’re going to have to make is whether or not we’re going to keep the diamond-shaped social structure or a scientific Enlightenment civilization going, or do what is very natural, and that is allow it to fall apart the way the Athenians allowed the Periclean experiment to fall apart, because all the odds are against it. And I’m involved in the search for extraterrestrial intelligence as you know. I read a lot of the major papers about that field. I still have my hand in astronomy…but the fundamental thing is called the Fermi paradox. And that is the question, if life seems so easy to develop in the cosmos, and planets, and fifteen years ago we knew of none outside our solar system, now we know of over a thousand…the question is, why does the universe appear to be empty of any other sapient life? I’ve just stirred a hornet’s nest just now by saying that, and I’m sure many people are just howling right now; they have their own particular answers. I’ve cataloged hundreds of these. And the fact of the matter is, one of the failure modes that human beings could fall into, is that this civilization, the mode of government that dominates human society for our future, may be a return to the pyramidal social structure – elite, oligarchic ruled, top-down – because that’s the standard one, that’s the standard human civilization."

"The Chinese are right now trying to build the very best version of the top-down, controlled, pyramidal social structure based on Confucian models. It’s possible. And if we wind up being in such a situation, if that governs the world, I hope it’s a Chinese model, because there’s lot of noblesse oblige there. But I am loyal to the civilization that made these positive-sum games, that empowered transparency and reciprocal accountability, and competition with compassion, that empowered science fiction…The point is this – if it’s so natural for us to fall into that feudal pattern that 99 percent of human cultures follow it, and it resonates in our hearts, in our romanticism. That’s why we love Tolkien, Lord of the Rings and all that; the kings and wizards and all those things. We love that because we’re all descended from the harems of the guys who managed to become the kings.

And I find it so ironic that the great-great grandchildren of Ben Franklin and Thomas Jefferson and Adam Smith and George Washington, and Abraham Lincoln…that the great-great children of these heroes of the Enlightenment who saved us from that beastly way of life, should all go running off saying, ‘Oh, I wished we lived under kings.’ And I believe in answer to the Fermi paradox, I believe that one of the answers is, that it’s possible that most civilizations out there have the same Darwinian dynamic, and that most of them become top-down oligarchies who are hyper-conservative and repress scientific advancement and never go out to the stars. And I think this is the level of the choice that we’re making… It may not just be the fate of humanity that’s at stake in the decisions we’re making in the next fifty years. We may have a chance to be the exception if we keep Enlightenment going, and get militant and get involved in doing it, all of us, that we may be the exception who builds starships, and we may be the ones who go out and rescue everybody else. And what a task, what an incredible task, for our grandchildren to have! We have a grittier task, and that is, to prepare a civilization that can create such grandchildren. That can create grandchildren who are capable of creating a civilization like Star Trek. That’s a task.”

That last thought from Brin really feeds into this comment which KMO makes early on in his conversation with Mann where he tacitly endorses the dark side of our romantic impulse:

“...We were talking about how it seems like there’s a portion of the population who really longs for the old days when there was a lot more violence, and it was a lot more socially respectable, and might made right, and nobody even questioned that, and they really long for it. And the zombie apocalypse, as it unfolds, gives a lot of people permission to go and enact those fantasies. And I’m just wondering how lasting the progress we seem to have made really is.”

I too, have talked about how the economy is transitioning to a zero-sum game future, where one person's gains come at the expense of another person's, rather than the cooperative game which most economists depict our existing economy as. While Brin is correct to look at the European Enlightenment, I wonder how much he knows about the Peak Oil situation. Is it possible that the situation of non-zero-sum games is as much a consequence of fossil fuels as Enlightenment thinking? Or are they both a consequence of the inventive and inquisitive forces unleashed by science?

I think we can say the weakening of despotism and the empowering of the individual caused a lot of these gains to occur. Certainly the new scientific inventions and the opening of markets empowered individuals in a way they had not been through much of history since the dawn of agriculture. Empowered individuals could just do things their own way, without worrying about some king or dictator putting a stop to it. And this evolution inspired good ideas to rise and bad ones to fall, as David Brin described above.

I also think the opening of the vast new frontiers for European settlers (e.g. the New World, Australia, South Africa) had a lot to do with that. It's hard to be a despot if your victims can just pack up and go someplace more amenable without having to be under someone else's thumb. That's probably what kept despotism from forming in ancient human societies when food was plentiful, or at least from becoming too oppressive. And the frontiers had feedback loops - the American Revolution helped usher in the French; Enlightenment thinkers heard the stories of native peoples and yeoman farmers not living under kings, and these caused revolutionary ideas to spread the other way across the Atlantic. Their definition of what was possible expanded to include things people just didn't think about before. The opening of these frontiers, even before the advent of fossil fuels, raised the living standards of Europeans. That's why you get the Enlightenment before you get the Industrial Revolution. In fact, you could argue it's what made the Industrial Revolution possible - the weakening of the oligarchy and the empowerment of the individual, along with new modes of thinking about what was possible.

But when a frontier is closed due to overexploitation, when scarcity starts to bite due to overpopulation, then suddenly despotism rears it's ugly head, and you get the kind of oligarchies and conservative elites that Brin talks about above. People in places like ancient Mesopotamia and China, due to the overexploitation of the environment and population growth, had no choice but to submit early on in the human story. But now it seems like the entire world is closed off with nowhere to turn. Sure we can feed ten billion, but at what cost to our freedom?

In their book Why Nations Fail, Acemoglu and Robinson talk about failing countries as having "extractive elites," elites who are able to sabotage the individual initiative, creativity, discovery, and social well being of their society for their own personal gain. By contrast, successful societies have "open institutions" where anyone can participate and create better ideas and innovations (including social ones) and improve their lives. Geography also matters - see Jared Diamond's review of Why Nations Fail.

Right now I'm reading Ian Morris' Why the West Rules - For Now, and it seems that this is a significant factor in his central question - why the West took over instead of China. China never made this moral and institutional progress because it was always pushing up against Malthusian limits. It seems that, historically speaking, and tying in with Brin's basic idea, that Europe of the Enlightenment had open institutions, whereas China and previous societies managed to hold onto extractive elites and closed institutions. Hyper-conservative elites were always able to bully the individual into submission, and they never made those final leaps despite their intelligence, organizational capacity, and history of invention. By contrast, Europe gained a sudden "release valve" which undermined the power of elites and opened up a flurry of new ideas along with higher living standards. And eventually, we added fossil fuels to the mix to create the world of abundance some of us enjoy today.

What it boils down to is this: in the age of fossil fuels and innovation, we set up institutions to create positive-sum games where competition drove better lifestyles for all. In an age of shrinking resources, we will increasingly turn to negative sum games, where one person’s gain comes at another’s loss. These new competitions are winner-take-all rather than win-win.

I think Brin's right, the default state is to slide back into despotism, and we will have to fight to keep that at bay. It's not just fossil fuels - overcrowding and lack of alternatives are a part of it. The labor shortages after the Black Death loosened the bonds of serfdom from medieval Europeans, fatally weakened the feudal system, and set the stage for the Renaissance and the subsequent Age of Exploration. One thing you get reading Morris' book is the idea that there is this cyclical process where civilizations push up to the limits of their environment, and then fall apart. And what happens when they pick up the pieces varies from culture to culture. But the certainty is that the more empowered the individual, the less crowded the environment, the greater the range of options for the individual, the more resources per capita, and the weaker the hold of elites, the greater the likelihood of preserving moral progress and advancing as a society, to space or anywhere else.

For her part, Nicole Foss, quoted in the C-Realm podcast, says the following:

"Basically, when you have a whole lot of energy, things tend to improve from a social justice perspective, because when you have energy slaves you have less need for real ones. So the emancipation of slaves has been largely been a function of energy supplies that made more sense to use. So we've had a lot more freedom. And I think we've moved in our period of expansion, we've really moved to a point where, the most effective way for people at the top of the food chain to secure a share of the wealth has been to let people be free, nominally, and tax the results, because that has produced more than direct ownership would have done. But that freedom probably hangs on whether that continues to be the case."

"So in a period of expansion, giving people freedom and taxing the results is the most efficient way to concentrate wealth in the hands of the few. In period of contraction that's probably not true. When there's a lot less economic activity going on, then it's probably going to be more efficient from the point of view of the powers-that-be to directly control the means of production. So I think we're probably going to be looking at backsliding in terms of social justice and more of a reliance on human labor, not all of which will be voluntary, unfortunately. When you have less energy slaves available, and we can't just push buttons and have things happen, then I think we're going to have a lot more human labor."

Morris talks about this issue too in his concluding chapter (I skipped ahead a bit).

Civilizations have collapsed before and societies have backtracked in terms of social development in history, but we've never had a fossil fuel revolution before. We've never broken the ceiling of progress that we did in the age of fossil fuels, and we've never tasted the freedom we enjoy today since before the dawn of agriculture. The question really is, do we have the fight in us? Clearly the last few decades, and especially the last five years do not inspire confidence. We now know what's possible, Will we remember and fight to keep it?

I'll conclude with this tidbit from the C-Realm podcast:

KMO:I'm reminded of a phrase from 1493. It made such an impression on me, I wrote it in my notebook. The phrase is, 'The human propensity to believe that flukes of good fortune will never come to an end.'

Tuesday, January 29, 2013

The Egyptian defence minister, General Abdel Fattah al-Sissi, has given warning that the unrest sweeping the country could lead to the collapse of the state.

Failure to resolve the situation "could lead to grave repercussions if the political forces do not act" to tackle it, Sissi said on Tuesday, in comments posted on his Facebook page. "The continuing conflict between political forces and their differences concerning the management of the country could lead to a collapse of the state and threaten future generations," he said.

His comments were excerpted from a speech he gave to students at a military academy.

Sissi, who is also the head of Egypt's military, further said that the political, economical, social and security problems facing Egypt constitute "a threat to the country's security and stability". His comments will be seen as a warning to Egypt's political class, which has done little to end the unrest. Sissi's remarks come after five days of nationwide unrest that left 52 people dead, hundreds wounded, and major cities paralysed.

Reactor 4 may not have been the only thing that exploded that day. Fewer than six years elapsed between the meltdown at Chernobyl and the formal dissolution of the Soviet Union—six years marked by suspicion of government, dissatisfaction with public safety, and demands for greater transparency. Could Chernobyl have caused the first, most fundamental crack in the Soviet state and led to its collapse?

That might sound like an audacious proposal, but it’s been advanced by none other than the man who oversaw the dismantling of the USSR, Mikhail Gorbachev. He states flatly that the Chernobyl explosion was “perhaps the real cause of the collapse of the Soviet Union.” According to Gorbachev, the Chernobyl explosion was a “turning point” that “opened the possibility of much greater freedom of expression, to the point that the system as we knew it could no longer continue.” Gorbachev introduced his policy of glasnost, or “openness” of ideas and expression, not long before the Chernobyl explosion. It was his remedy for widespread censorship and government secrecy. To Gorbachev, Chernobyl proved the wisdom and necessity of glasnost. The explosion and attendant tumult, he claims, “made absolutely clear how important it was to continue the policy of glasnost.”

Gorbachev’s laudable dedication to glasnost may have set the state on a path toward destruction. Sovietologists “don’t like monocausal explanations” of the fall of the USSR, said Michael David-Fox, a professor of Russian and Soviet history at Georgetown University. Still, “there’s a case to be made” that Chernobyl occurred early enough in Gorbachev’s first phase of glasnost to hasten the process and eventually drive the state into the ground.

Virtually every past civilization has eventually undergone collapse, a loss of socio-political-economic complexity usually accompanied by a dramatic decline in population size. Some, such as those of Egypt and China, have recovered from collapses at various stages; others, such as that of Easter Island or the Classic Maya, were apparently permanent. All those previous collapses were local or regional; elsewhere, other societies and civilizations persisted unaffected. Sometimes, as in the Tigris and Euphrates valleys, new civilizations rose in succession. In many, if not most, cases, overexploitation of the environment was one proximate or an ultimate cause.

But today, for the first time, humanity's global civilization—the worldwide, increasingly interconnected, highly technological society in which we all are to one degree or another, embedded—is threatened with collapse by an array of environmental problems. Humankind finds itself engaged in what Prince Charles described as ‘an act of suicide on a grand scale’, facing what the UK's Chief Scientific Advisor John Beddington called a ‘perfect storm’ of environmental problems. The most serious of these problems show signs of rapidly escalating severity, especially climate disruption. But other elements could potentially also contribute to a collapse: an accelerating extinction of animal and plant populations and species, which could lead to a loss of ecosystem services essential for human survival; land degradation and land-use change; a pole-to-pole spread of toxic compounds; ocean acidification and eutrophication (dead zones); worsening of some aspects of the epidemiological environment (factors that make human populations susceptible to infectious diseases); depletion of increasingly scarce resources, including especially groundwater, which is being overexploited in many key agricultural areas; and resource wars. These are not separate problems; rather they interact in two gigantic complex adaptive systems: the biosphere system and the human socio-economic system. The negative manifestations of these interactions are often referred to as ‘the human predicament’, and determining how to prevent it from generating a global collapse is perhaps the foremost challenge confronting humanity.

Britain's most senior medical adviser has warned MPs that the rise in drug-resistant diseases could trigger a national emergency comparable to a catastrophic terrorist attack, pandemic flu or major coastal flooding.

Dame Sally Davies, the chief medical officer, said the threat from infections that are resistant to frontline antibiotics was so serious that the issue should be added to the government's national risk register of civil emergencies.

She described what she called an "apocalyptic scenario" where people going for simple operations in 20 years' time die of routine infections "because we have run out of antibiotics".

Lord Stern, author of the government-commissioned review on climate change that became the reference work for politicians and green campaigners, now says he underestimated the risks, and should have been more "blunt" about the threat posed to the economy by rising temperatures.

In an interview at the World Economic Forum in Davos, Stern, who is now a crossbench peer, said: "Looking back, I underestimated the risks. The planet and the atmosphere seem to be absorbing less carbon than we expected, and emissions are rising pretty strongly. Some of the effects are coming through more quickly than we thought then."

The Stern review, published in 2006, pointed to a 75% chance that global temperatures would rise by between two and three degrees above the long-term average; he now believes we are "on track for something like four ". Had he known the way the situation would evolve, he says, "I think I would have been a bit more blunt. I would have been much more strong about the risks of a four- or five-degree rise."

He said some countries, including China, had now started to grasp the seriousness of the risks, but governments should now act forcefully to shift their economies towards less energy-intensive, more environmentally sustainable technologies.

"This is potentially so dangerous that we have to act strongly. Do we want to play Russian roulette with two bullets or one? These risks for many people are existential."

Monday, January 28, 2013

The question is often asked whether humans are naturally heirachical, or more cooperative. Do we crave status or belonging? It is often assumed that since hunter-gatherers are egalitarian, that we are a naturally egalitarian species. But this article asks poses a different idea. It posits that the hunter-gatherer lifestyle, rather than being inherent to humans, is actually an aberration that imposed egalitarianism on a naturally heirarchical species. Because large kills required teamwork, and because the fruits of large kills could not be hoarded, these gave rise to the storied egalitarianism among hunter-gatheres. And tool use provided a levelling effect. But there is little evidence that this is inherent or natural to humans:

Levels of inequality might have fluctuated during our evolutionary past. The last common ancestor we share with chimpanzees — a primate who lived in the rainforests of Africa some five million years ago — was probably as hierarchical as chimps still are today. Alpha male chimps are, basically, big bullies who take what they want and brutally punish junior males who dare to challenge them, and the first hominids were probably similar. Yet, according to the anthropologist Christopher Boehm, all this changed around 500,000 years ago when our ancestors first developed spears. The development of more sophisticated weapons meant that physical strength was no longer decisive in determining the outcome of a fight. Weaker males could now kill stronger ones, enabling the transition to more egalitarian communities in which leadership was more a matter of skilful negotiation and bargaining than simple brute force.

If Boehm is right, it is the egalitarianism of hunter-gatherers that is unusual from an evolutionary point of view, a mere phase between the dominance hierarchies of our primate inheritance and the social inequality brought on by the advent of farming. Far from being our natural state, the low levels of inequality in bands of hunter-gatherers might be a fragile achievement resulting from a certain stage of military technology, a temporary truce among creatures who are innately predisposed to hierarchical arrangements.

The development of weaponry might also have favoured the transition to egalitarianism by enabling our ancestors to hunt big game. There is far too much meat in a dead bison for one hunter to consume all by himself, so most of it is eaten by others. But the link between meat-sharing and egalitarianism does not pass by way of equal distribution. Some scholars argue that hunter-gatherers do not divide the spoils of the hunt equally among the members of the band as if they were practicing some kind of primitive communism. Rather, those who come back empty-handed snatch scraps of meat from the successful hunter without permission. This is a model of human sharing known as ‘tolerated theft’. The theft is tolerated by the successful hunter only because he is too busy stuffing his own face to punish every transgression. Once again, egalitarianism arises from the difficulty of coercion, not because of fellow feeling or kindred spirit.

And status heirarchies are directly tied to mental health in an evolutionary sense:

According to the social competition hypothesis of depression, humans are exquisitely sensitive to small differences in social status. Such sensitivity was vital when our ancestors lived in smaller bands of hunter-gatherers, where status differences were relatively slight. But in today’s world, where the global elite earn thousands of times more than those at the bottom of the economic heap and have completely different lifestyles, our status detectors go into overdrive. Hence a sensitivity that evolved to help low-status individuals signal obedience would, in today’s world, produce pathological results.

Support for this idea is provided by studies of dominance hierarchies in other primates. Low-ranking vervet monkeys, for example, have serotonin levels that are half those of the alpha males, and low-status yellow baboons have elevated levels of the stress hormone cortisol. Both of these physiological responses are found in depressed people, so perhaps inequality does literally get under our skin. A study of British civil servants found that those in lower-grade jobs showed significantly higher levels of the cortisol-awakening response (the difference between cortisol levels at waking and 30 minutes later, which is thought to be linked to the hippocampus’s preparation to face anticipated stress) than those in higher grades. Contrary to popular belief, then, it seems that those at the top of the pyramid, who tend to have the most decision-making responsibility, have the least stressful lives. One theory is that, the lower one is in the chain of command, the less control one has over one’s daily life. Taking orders, rather than giving them, results in raised heart rate, stress hormones, and blood pressure.

Inequality is not a negative-sum game — in which everybody ends up worse off — but a zero-sum game, in which the poorer health of those at the bottom of the pile is offset by the health gains of those at the top. There is nothing like the sight of a beggar to make one feel rich. It is not enough to succeed, as Gore Vidal said; others must fail.

The ultimatum game, which is often used to test ideas of fairness, actually varies from cuture to culture:

Evolutionary psychologists have also looked to experimental psychology for evidence that we are naturally averse to inequality. In the ultimatum game, for example, two strangers are paired and given a sum of money. One of them — usually referred to as the ‘proposer’ — has to decide how to divide the money. The proposer might suggest a 50-50 split, or they might offer only 10 per cent and keep the lion’s share. The other player can then either accept or reject this offer. If the responder accepts the offer, each player walks away with the share suggested by the proposer. If the responder rejects the offer, each player walks away with nothing.

According to game theory, a rational proposer should always offer the smallest amount possible, and a rational responder should always accept the proposer’s offer, no matter how small it is. After all, some money is better than none. But this isn’t what people actually do when they play this game. Instead of offering the smallest possible amount, most proposers offer between 40 and 50 per cent of the money. And on the few occasions that proposers offer less than 20 per cent, responders reject about half of those offers, despite the fact that this means both lose.

Such findings have been interpreted as evidence that people naturally dislike inequality and will sacrifice some personal gains to avoid it. However, when the experiment has been carried out with indigenous people with a low degree of market integration, the results are very different. Machiguenga farmers in Peru, for example, offer very little, and accept almost every offer, no matter how derisory. In the cultures least exposed to the influence of capitalism, people behave almost as greedily as game theory suggests they should. This does not bode well for the idea that inequality aversion is part of our DNA.

Evolutionary psychologists have also looked to experimental psychology for evidence that we are naturally averse to inequality. In the ultimatum game, for example, two strangers are paired and given a sum of money. One of them — usually referred to as the ‘proposer’ — has to decide how to divide the money. The proposer might suggest a 50-50 split, or they might offer only 10 per cent and keep the lion’s share. The other player can then either accept or reject this offer. If the responder accepts the offer, each player walks away with the share suggested by the proposer. If the responder rejects the offer, each player walks away with nothing.

According to game theory, a rational proposer should always offer the smallest amount possible, and a rational responder should always accept the proposer’s offer, no matter how small it is. After all, some money is better than none. But this isn’t what people actually do when they play this game. Instead of offering the smallest possible amount, most proposers offer between 40 and 50 per cent of the money. And on the few occasions that proposers offer less than 20 per cent, responders reject about half of those offers, despite the fact that this means both lose.

Such findings have been interpreted as evidence that people naturally dislike inequality and will sacrifice some personal gains to avoid it. However, when the experiment has been carried out with indigenous people with a low degree of market integration, the results are very different. Machiguenga farmers in Peru, for example, offer very little, and accept almost every offer, no matter how derisory. In the cultures least exposed to the influence of capitalism, people behave almost as greedily as game theory suggests they should. This does not bode well for the idea that inequality aversion is part of our DNA.
There was large discussion about methods, about whether we could actually pull this off, and then over the next two summers these field anthropologists went to the field and conducted the ultimatum game as well as a few other games—not systemically across the societies— but it gave us insight that we would then later use, and what we found is that societies vary dramatically, from societies that would never reject, to societies that would even reject offers above 50 percent, and we found that mean offers ranged across societies from about 25 percent to even over 50 percent. We had some of what we called hyper fair societies. The highest was 57 percent in Lamalera, Indonesia.

We found we were able to explain a lot of the variation in these offers with two variables. One was the degree of market integration. More market-integrated societies offered more, and less market integrated societies offered less. But also, there seemed to be other institutions, institutions of cooperative hunting seemed to influence offers. Societies with more cooperative institutions offered more, and these were independent effects.

This then led to a subsequent project where we measured market integration much more carefully along with a large number of other variables, including wealth, income, education, community size, and also religion. We did the Ultimatum Game along with two other experiments. The two other experiments were the Dictator Game (the Dictator Game is like the Ultimatum Game except the second player doesn't have the option to reject) and the Third Party Punishment Game.

In the Third Party Punishment Game, there are three players and the first two players play a Dictator Game. They're allotted a sum of money, say $100, and the first player can offer any portion of the $100 to the second player, player B. Now, player B in this game can't do anything, and they just get whatever they're offered. But there is a third player, player C, and player C is given half the amount that A and B are dividing up, and he can use some of his money (20 percent of it actually) to pay to take money away from A at three times the rate. If he's given $50, he can use $10 of it to take $30 away from player A. Suppose player A gives only $10 to player B and keeps $90 for himself, then player B will go home with $10. Now, player C can pay $10, so he goes home with $40 instead of $50 in order to take $30 away from player A. Player A would go home with $60 instead of $90, because he got punished. Player B goes home with $10, and player C goes home with $40 instead of $50 because he chose to punish.

This gives us two different measures of willingness to punish strangers, ephemeral interactions—people that you don't know and won't see again. In the experiment, one is rejection in the Ultimatum Game, and then this Third Party Punishment measure, and it gives us three measures of fairness in this kind of transaction. It gives us offers in all three games and what we found there is that market integration again predicts higher offers in all three games, and size of the community predicts willingness to punish and this fits with a lot of theoretical work, suggesting that if you have small communities, you don't need punishment. You don't need costly punishment. You need some kind of sanctioning system to keep people in line, but you're probably not going to do it with single individuals punishing. You have some other mechanism. It could be some kind of reputational mechanism like if they don't cooperate in this situation, then you won't interact with them in some other situation. It's a withdrawal of interaction rather than direct punishment. There's a number of different ways to create norm systems that operate like that.

In a big society punishment can be most effective because reputational mechanisms can be weak. If you're in a big society and you encounter somebody, you probably don't have friends in common through which you could pass reputational information for which punishment could be generated. You might want to punish them right on the spot or someone who observes the interaction might want to punish them right on the spot or call the authorities or whatever, which is also costly.
This creates a puzzle because typically people think of small-scale kinds of societies, where you study hunter-gatherers and horticultural scattered across the globe (ranging from New Guinea to Siberia to Africa) as being very pro social and cooperative. This is true, but the thing is those are based on local norms for cooperation with kin and local interactions in certain kinds of circumstances. Hunter-gatherers are famous for being great at food sharing, but these norms don't extend beyond food sharing. They certainly don't extend to ephemeral or strangers, and to make a large-scale society run you have to shift from investing in your local kin groups and your enduring relationships to being willing to pay to be fair to a stranger.

Saturday, January 26, 2013

Before we leave the topic of automation for now, there are a few points that I think need further clarification or elucidation:

1.) You need not be an economist or business analyst to see job loss due to automation in action, you can see it with your own eyes, as I pointed out in the article. Most U.S. media is propaganda for the business class, so it’s best to trust your own direct observations and conversations with people. However, it is good to see at least a little bit of the mainstream media focusing on this issue.

2.) It is often argued that by pinpointing automation as a significant factor in job loss, you dismiss all the other reasons such as offshoring, insourcing, mass immigration, the housing bubble, energy prices, poor schools, etc. Such is not the case. Certainly these reasons are not mutually exclusive. Yes, capitalism is an economic system that is failing on multiple fronts simultaneously, and all attempts at reform are being squelched in favor a nineteenth-century model. But automation is significant, and we need not dismiss it when we speak of other factors. Trying to come up with single issue cause of job loss is silly.

3.) Writing about automation should not be construed as a dismissal of the rigging of institutions against workers and in favor of the investor class, nor as an apology for neoliberalism. Nor does it allow us to ignore things like monopoly concentration, which Paul Krugman has also pointed to as a factor driving jobs loss, or the decline of unions. An all-out war against wages has been fought on multiple fronts since the 1970’s (and arguably for the whole history of capitalism); automation is simply the latest arrow in the quiver.

4.) Yes, there are many idle workers and resources that are not being utilized to their full extent. However, this does not mean we should dismiss the effects of automation. There are millions of things that need doing in this country that are not getting done, from rebuilding our infrastructure to insulating our homes to teaching our children, so we should not just throw up our hands and say we can't create jobs because of automation. The reason these jobs are not getting done is either because they are not profitable for the private sector, or the money does not exist to put them to work. There is a role for government policy in addressing these issues - MMT ideas such as the job guarantee are useful compromises that might mitigate some of the pain from job loss and take care of some of our urgent tasks that need doing.

5.) There is no institution specifically tasked with the creation of jobs in society. As is often said, the economy is merely the actions of individuals acting in their own self-interest. “Jobs” are merely side effects of meeting our needs. There is no law of economics saying there must be enough jobs for everyone.

6.) We need to get past the notion that any government job is somehow illegitimate, or by definition "waste".

7.) Outsourcing through the Internet, self service kiosks, DIY software and online commerce are all forms of job destruction that we can file under automation, even though they are often forgotten. The AP article is wise to identify these.

8.) The notion that we should all just create our own jobs is farcical. Nobody creates a job; they fulfill a need. If those needs are already fulfilled by a big business for less money, they will be. Selling our services to others assumes our peers have money to buy those services, which will be true of less and less people, or business demand is infinite, which it is not. The earning power of the middle class is declining in the aggregate, meaning we cannot simply sell our services to each other or even the one percenters, since their needs are not infinite either.

9.) The idea that new technologies lead to decentralization does not bear historical scrutiny. Technology usually leads to centralization because it is expensive, complicated, requires rare expertise, and leads to economies of scale. Hundreds of car companies consolidated to just three, and so on. Even the Internet is coming under the control of large companies like Google, Apple and Facebook. 3D printing will probably fall under the control of large companies that can afford the technology and take advantage of economies of scale to sell access to it for the lowest price rather than everyone printing out all their own goods in some sort of democratic vision.

10.) 3D printing will not replace manufacturing nor create millions of new jobs. This is more wishful thinking than reality.

11.) It bears repeating that we are not seeing people transition to new jobs, but rather to already existing occupations at lower pay. Statistics tell us that the majority of new jobs will be low wage McJobs no matter how much we educate the workforce. This is borne out in statistics on wealth concentration, declining wages, and inequality.

12.) To date, entire new industries are not being created due to automation, they are merely allowing wages in existing industries to be lowered. For example, the replacement of automobile factory workers by robots has not created vast new industries, except for maybe those who program and build the robots. These jobs will not employ many people, however, even if they were easy to acquire (see below).

13.) High wage occupations are increasingly rare and intentionally surrounded by high barriers to entry (college tuition, geography, nepotism, unpaid internships, etc.). These barriers are not accidental but intentional – they are a feature, not a bug, which is why calls to make college affordable will go unheeded. They are also why online courses are no solution – the entire point of universities and licensure is to limit the amount of people the professional class; the actual education received is irrelevant. "Opportunity hoarding" by the wealthy means that high wage jobs will be simply unavailable for the vast majority of people no matter how much education they receive or how hard they work.

14.) It has been said that what’s different is the rate at which automation is replacing jobs thanks to things like Moore's Law, not allowing industries to catch up as they had in the past. I would suggest that it’s not merely the rate, but that what we're seeing is a qualitatively different state of affairs than before. Most previous automation consisted of ways to augment the efficiency and productivity of the individual worker (powered looms, gas engines, electric tools, etc.), not the replacement of the worker. This had the effect of expanding the economy as a whole. But the microchip is an electronic brain, and this is what’s new. Never before have things like human cognition been successfully reproduced until now. This allows a widespread replacement of workers across all industries simultaneously, and an augmentation of mental capabilities (for example, an engineer with a design program or an accountant with a spreadsheet), rather than just physical ones, meaning even non-physical work will start to be eliminated.

15.) Most jobs created since deindustrialization have been office or service jobs, both of which are under assault by automation. Neither IT nor health care is likely absorb all the job seekers. "Creative" jobs are always a premium and will not be widespread.

16.) While new jobs have been created over the past several decades, no fundamentally new job categories have been created. We do the same jobs, just with computers and automation. The list of major occupational categories from the Bureau of labor statistics is here: http://www.bls.gov/soc/major_groups.htm. There is no category on this list where labor cannot be reduced by automation. As Swedish business consultant Mats Larsson has pointed out, human beings have a finite ability to invent truly new activities. He argues that most recent inventions have been just slight improvements in the speed of rudimentary things that we’ve actually been doing for a long time, such as travel, transport, communication and trade. Innovation, while it still occurs, is ever more costly and incremental. Today, it often has to do with efficiency measures, which, although useful, will not open vast new areas of employment, rather they will merely allow us to do with more with less (people, energy, material, etc). Thus there are no new industries or innovations in the horizon waiting to save us.

17.) Automation means our problems with job creation are not temporary or a phase but structural. Joblessness is not the product of a banking crisis, the national debt, or the business cycle. Even if those were solved tomorrow, the problem would remain.

18.) Corporate profits as a share of the economy are at an all-time high, whereas workers' share of the economy are at an all-time low. This is in contradiction to orthodox economic theory.

19.) Expensive worker benefits like health care will speed up the desire for automation, as will a declining rate of profit.

20.) Because job elimination is such a slow process, it will not produce a critical mass to mitigate against it. It is a slow-motion catastrophe. The idea that people will rebel is unlikely, since they will likely see joblessness as a personal failing, encouraged by the cultural notions of self-reliance and bootstrapping.

21.) The decline in jobs since deindustrialization has been accompanied by a marked rise in incarceration rates and an expansion of the police state. This suggest that the authorities are, in fact, worried about the destabilizing effects of joblessness, but will take no government action outside of protecting the winners, criminalizing poverty, and suppressing dissent.

23.) Already a complex narrative is emerging of "The Theory of The Moocher Class" (with apologies to Veblen), promoted by the wealthy. The claim is that as jobs disappear, tax revenue shrinks and more people draw on government benefits, it is these government benefits that are the cause of the bad economy in the first place! In the narrative, people are lazy by choice because of generous government benefits, and the benefits are bankrupting the productive class and preventing them from creating more jobs (as if those jobs would not be sent overseas or automated).

24.) We see the creation of a vast new "wealth defense" industry dedicated to preventing any form of redistribution or equitable distribution of worker productivity. This industry actively bankrolls thinktanks, scholars, etc. One of their common themes is that wealth is a perfect meritocracy, where the people on the top "earn" their disproportionate share of returns because they are better than everyone else in ability, moral values, etc. This is a favorite theme of David Brooks. It is also claimed in certain sectors that a declining economy is caused by "bad behavior" such as out-of-wedlock births, rather than such behavior resulting from declining economic opportunity.

25.) The economy will also need to absorb millions of new workers, both male and female, from places like China, who will want to access upward mobility. Corporations can hire talent from anywhere in the world, and have no loyalty to any particular country. While shrinking and aging workforces may mitigate some of the effects, it will not be enough to offset jobs losses due to automation.

Wang Zengsong is desperate for a steady job. He has been unemployed for most of the three years since he graduated from a community college here after growing up on a rice farm. Mr. Wang, 25, has worked only several months at a time in low-paying jobs, once as a shopping mall guard, another time as a restaurant waiter and most recently as an office building security guard.

But he will not consider applying for a full-time factory job because Mr. Wang, as a college graduate, thinks that is beneath him. Instead, he searches every day for an office job, which would initially pay as little as a third of factory wages.

“I have never and will never consider a factory job — what’s the point of sitting there hour after hour, doing repetitive work?” he asked.

Millions of recent college graduates in China like Mr. Wang are asking the same question. A result is an anomaly: Jobs go begging in factories while many educated young workers are unemployed or underemployed. A national survey of urban residents, released this winter by a Chinese university, showed that among people in their early 20s, those with a college degree were four times as likely to be unemployed as those with only an elementary school education.

It is a problem that Chinese officials are acutely aware of.

“There is a structural mismatch — on the one hand, the factories cannot find skilled labor, and, on the other hand, the universities produce students who do not want the jobs available,” said Ye Zhihong, a deputy secretary general of China’s Education Ministry.

China’s swift expansion in education over the last decade, including a quadrupling of the number of college graduates each year, has created millions of engineers and scientists. The best can have their pick of jobs at Chinese companies that are aiming to become even more competitive globally.
But China is also churning out millions of graduates with few marketable skills, coupled with a conviction that they are entitled to office jobs with respectable salaries.

Part of the problem seems to be a proliferation of fairly narrow majors — Mr. Wang has a three-year associate degree in the design of offices and trade show booths. At the same time, business and economics majors are rapidly gaining favor on Chinese campuses at the expense of majors like engineering, contributing to the glut of graduates with little interest in soiling their hands on factory floors.

Zhang Xiaoping’s mother dropped out of school after sixth grade. Her father, one of 10 children, never attended.

But Ms. Zhang, 20, is part of a new generation of Chinese taking advantage of a national effort to produce college graduates in numbers the world has never seen before.

A pony-tailed junior at a new university here in southern China, Ms. Zhang has a major in English. But her unofficial minor is American pop culture, which she absorbs by watching episodes of television shows like “The Vampire Diaries” and “America’s Next Top Model” on the Internet.

It is all part of her highly specific ambition: to work some day for a Chinese automaker and provide the cultural insights and English fluency the company needs to supply the next generation of fuel-efficient taxis that New York City plans to choose in 2021. “It is my dream,” she said, “and I will devote myself wholeheartedly to it.”

Even if her dream is only dorm-room reverie, China has tens of millions of Ms. Zhangs — bright young people whose aspirations and sheer numbers could become potent economic competition for the West in decades to come.

China is making a $250 billion-a-year investment in what economists call human capital. Just as the United States helped build a white-collar middle class in the late 1940s and early 1950s by using the G.I. Bill to help educate millions of World War II veterans, the Chinese government is using large subsidies to educate tens of millions of young people as they move from farms to cities.

The aim is to change the current system, in which a tiny, highly educated elite oversees vast armies of semi-trained factory workers and rural laborers. China wants to move up the development curve by fostering a much more broadly educated public, one that more closely resembles the multifaceted labor forces of the United States and Europe.

DeMint: "Almost half of Americans are getting something from government, and the other half are paying for it. And we're on a track where 60 percent are getting something from government and 40 percent are paying for it. You can't sustain a democracy with that mix…. We've got to understand we're in trouble, that we don't have much time." Or this from Steve Doocey on Fox and Friends: "Coming up! A controversial question. With 47% of Americans not paying taxes--47%--should those who don't pay be allowed to vote?" Who? The 47 percent themselves… [who] vote into office people willing to take from the top half…. Consequences? The system eventually collapses into itself, as those at the margin work less and also join in demanding more…

A Nation of Government Dependents?: **49% of U.S. Population Lives in Households Receiving Government Benefits:88 In 2010, 49 percent — or nearly half — of the U.S. population lived in a household receiving government assistance... “way up from 1983, when fewer than a third were government beneficiaries.”... 16 percent of the population lived in a household receiving Social Security benefits, and 15 percent in a household receiving Medicare benefits. Medicaid benefits had the largest share of dependents, with 26 percent of the population living in a household receiving such benefits. About 35 percent of Americans in 2010 lived in households that received benefits from at least one means-tested transfer program... 15 percent... receiving food stamps, 2 percent unemployment compensation, and 6 percent supplemental security income. The percent of the population living in a household receiving benefits for low-income families with children reached 8 percent, and those receiving temporary assistance for needy families reached 2 percent.... The more people receive government assistance, the more difficult it will be to reform these programs. The majority of future federal spending will be to finance this growing nation of dependents.

Jerry Pournelle’s Codominium stories from the early seventies used this idea as an explanation for social breakdown: economically parasitic non-working citizens, paid for by ever-shrinking numbers of taxpayers. It’s been around a long time as a just-so story.

Totally impervious to facts, too; neither pointing out that money is the creation of the state nor demonstrating just how brutally hard poor people tend to work will put a dent in it.

My take is that it’s not really economic at all; it’s an attempt to de-legitimize democracy as a political process, because democracy keeps getting the wrong answers.

And, as they note:

Jerry Pournelle’s science fiction novels about Falkenberg’s Legion describe not just the problem of too many “takers” (the 47%, a shiftless amoral idle mob) but also a solution: mass murder. Millions read Pournelle’s stories and smile at the “happy” endings. And not just Pournelle. Apocalypse porn is popular on the Right, with mega-deaths leaving behind a purified world of the righteous, such as Larry Burkett’s Chirstian sci-fi novel Solar Flare (1997).

Even existing programs are under assault, making things like a Universal Basic Income or a reduction in working hours almost impossible to imagine. I suspect what we'll see is more and more people becoming dependant on the ever smaller proportion of people who have jobs. Children will be dependant on their parents, spouses will be dependant on the other spouse (one-income families will return, just with lower living standards), boyfriends will be dependant on girlfriends, siblings will live with each other, roommates will be more common, friends and relatives will help each other out, etc. People without a social support network (like me) will be abandoned to homeless shelters or forced into suicide.

On a more positive note, given Americans' obsessive love affair with cars, the automation of driving might be the tipping point that makes Americans sit up and notice what's happening. See: Look Ma, No (Human) Hands (Paul Krugman).

Wednesday, January 23, 2013

The numbers startle even labor economists. In the United States, half the 7.5 million jobs lost during the Great Recession were in industries that pay middle-class wages, ranging from $38,000 to $68,000. But only 2 percent of the 3.5 million jobs gained since the recession ended in June 2009 are in midpay industries. Nearly 70 percent are in low-pay industries, 29 percent in industries that pay well.

In the 17 European countries that use the euro as their currency, the numbers are even worse. Almost 4.3 million low-pay jobs have been gained since mid-2009, but the loss of midpay jobs has never stopped. A total of 7.6 million disappeared from January 2008 through last June.

Experts warn that this "hollowing out" of the middle-class workforce is far from over. They predict the loss of millions more jobs as technology becomes even more sophisticated and reaches deeper into our lives. Maarten Goos, an economist at the University of Leuven in Belgium, says Europe could double its middle-class job losses.

Some occupations are beneficiaries of the march of technology, such as software engineers and app designers for smartphones and tablet computers. Overall, though, technology is eliminating far more jobs than it is creating.

To understand the impact technology is having on middle-class jobs in developed countries, the AP analyzed employment data from 20 countries; tracked changes in hiring by industry, pay and task; compared job losses and gains during recessions and expansions over the past four decades; and interviewed economists, technology experts, robot manufacturers, software developers, entrepreneurs and people in the labor force who ranged from CEOs to the unemployed.

The AP's key findings:

—For more than three decades, technology has reduced the number of jobs in manufacturing. Robots and other machines controlled by computer programs work faster and make fewer mistakes than humans. Now, that same efficiency is being unleashed in the service economy, which employs more than two-thirds of the workforce in developed countries. Technology is eliminating jobs in office buildings, retail establishments and other businesses consumers deal with every day.

—Technology is being adopted by every kind of organization that employs people. It's replacing workers in large corporations and small businesses, established companies and start-ups. It's being used by schools, colleges and universities; hospitals and other medical facilities; nonprofit organizations and the military.

—The most vulnerable workers are doing repetitive tasks that programmers can write software for — an accountant checking a list of numbers, an office manager filing forms, a paralegal reviewing documents for key words to help in a case. As software becomes even more sophisticated, victims are expected to include those who juggle tasks, such as supervisors and managers — workers who thought they were protected by a college degree.

—Thanks to technology, companies in the Standard & Poor's 500 stock index reported one-third more profit the past year than they earned the year before the Great Recession. They've also expanded their businesses, but total employment, at 21.1 million, has declined by a half-million.

—Start-ups account for much of the job growth in developed economies, but software is allowing entrepreneurs to launch businesses with a third fewer employees than in the 1990s. There is less need for administrative support and back-office jobs that handle accounting, payroll and benefits.

—It's becoming a self-serve world. Instead of relying on someone else in the workplace or our personal lives, we use technology to do tasks ourselves. Some find this frustrating; others like the feeling of control. Either way, this trend will only grow as software permeates our lives.

—Technology is replacing workers in developed countries regardless of their politics, policies and laws. Union rules and labor laws may slow the dismissal of employees, but no country is attempting to prohibit organizations from using technology that allows them to operate more efficiently — and with fewer employees.

Some analysts reject the idea that technology has been a big job killer. They note that the collapse of the housing market in the U.S., Ireland, Spain and other countries and the ensuing global recession wiped out millions of middle-class construction and factory jobs. In their view, governments could bring many of the jobs back if they would put aside worries about their heavy debts and spend more. Others note that jobs continue to be lost to China, India and other countries in the developing world.

But to the extent technology has played a role, it raises the specter of high unemployment even after economic growth accelerates. Some economists say millions of middle-class workers must be retrained to do other jobs if they hope to get work again. Others are more hopeful. They note that technological change over the centuries eventually has created more jobs than it destroyed, though the wait can be long and painful.

A common refrain: The developed world may face years of high middle-class unemployment, social discord, divisive politics, falling living standards and dashed hopes.

Now, what are we going to do about it?

P.S. I would also include the loss of suburban sprawl building as a contibutor to the jobless recovery and the lack of mid-range jobs. Kunslter's right: that's driven the post-war economy.

Tuesday, January 22, 2013

It's been about two years since I wrote the inaugural post on this blog, What Are People Good For?, and in that time job displacement due to technology has gone from the fringes to the mainstream. At the time, I could only find a very small number of people discussing the subject: Marshall Brain, the founder of How Stuff Works, Martin Ford, author of The Lights In The Tunnel, and David Autor, an economist at MIT. At the time, Paul Krugman had just started to question whether technological displacement might be an issue.

I guess I can claim some sort of foresight here. And another of my common themes - that the truly transformative technologies have already been invented, that innovation will bring increasingly diminishing returns because we've picked the low-hanging fruit first, and that we're inventing things mainly to keep our economy humming rather than to fulfill basic human needs - has been taken up by The Economist Magazine, no less. See:

I suppose I should imagine that my other themes might start to go mainstream - that we'll incereasingly wonder why the economy isn't getting "back to normal", why "growth" isn't returning, why more growth delivers less and less net gain; and that our net energy supplies are decreasing, that climate change threatens agricultural output and the existence of civilization, that democracies are actually police states controlled by an economic elite - might start to get even more attention. Maybe people will even realize that more innovation will not solve problems without implementing social reform.

There is a well developed theory that a key impetus for the development of European science in the seventeenth century was magical thinking, developed and promoted through the sixteenth century by the likes of Paracelsus, John Dee and Emperor Rudolph II. While there is little doubt that Hermeticism and Alchemy had a significant influence on the development of natural philosophy, magical thinking cannot explain the uniqueness of the scientific developments in Europe in the 1600s, since magic is a feature of all cultures, notably China. But this factual observation is tempered with an opinion, that good science is open where as magic is hidden and secretive, this is a central theme in Mauss' A General Theory of Magic.

An alternative, minority, theory for the foundations of modern science is in European financial practice. I prefer this theory because, by their very nature markets are social, collaborative, open, forums (those queasy about markets might wish to consider my view). Evidence for the significance of financial practice in the development of science comes in the fact that Copernicus was trained in financial mathematics and wrote on money before he wrote on cosmology, the Merchant Adventurer Thomas Gresham was a more influential contemporary of Dee, despite relative number of contemporary biographies of the two Elizabethians, who laid the basis of the Royal Society with the establishment of Gresham College. Simon Stevin was trained in finance and founded the influential Dutch Mathematical School that inspired Descartes and performed many of the experiments that Galileo is famous for. While Newton's interest in magic has been promoted, the fact that he spent half his life running the Mint is often overlooked.

Furthermore, magic was most influential in central Europe, centred on Rudolph's court, while the scientific revolution was centred in western Europe, by the likes of Huygens and Bernoulli who were as likely to work on financial problems as physical ones. Finally, my observation of good financial practitioners is that, contrary to popular belief, they do not believe they can control the markets, rather they have to navigate through its intrinsic uncertainties using the best tools available - specifically mathematics. This contrasts with the image of the magician controlling nature.

And the ultimate point:

It might seem to be splitting hairs to argue in favour of science originating out of finance rather than magic, but I am of the opinion that creation myths have a critical role in how cultures view themselves. If science believes it emerges out of magic it will be forever associated with secret knowledge that enables the magician to control nature and convert base metal into gold. If we regard science as originating out of markets constructed social instruments, then it is natural that we think of science as being "just another" social construction and it is made more human, and possibly more relevant. Simultaneously, and this is my ultimate objective, we shall start observing markets from a scientific perspective, rather than having them hidden from public oversight by a veil of mystery and obscure incantations.

This deﬁnition of science allows economics to base itself on an unjustiﬁed myth that barter evolves into money. However, it could alternatively allow economics to build itself on the Pandora myth, a myth that is remarkably similar to the story of the Fall in the Bible. It might be argued that the barter-money myth is un-scientiﬁc, since it is not supported by evidence, just as the Biblical myth is not supported by evidence. However, the barter-money myth endures because it conforms to two key characteristics of mainstream contemporary science. The myth is progressive, it describes a linear process where by the system evolves from a primitive beginning to the complex end we experience, and it is material, its explanations, involving people, goods and metal tokens, do not rely on metaphysical concepts such as society, trust or
belief.

Sunday, January 20, 2013

Warnings that the world is headed for "peak oil" – when oil supplies decline after reaching the highest rates of extraction – appear "increasingly groundless", BP's chief executive said on Wednesday.

Bob Dudley's remarks came as the company published a study predicting oil production will increase substantially, and that unconventional and high-carbon oil will make up all of the increase in global oil supply to the end of this decade, with the explosive growth of shale oil in the US behind much of the growth.

As a result, the oil and gas company forecasts that carbon dioxide emissions will rise by more than a quarter by 2030 – a disaster, according to scientists, because if the world is to avoid dangerous climate change then studies suggest emissions must peak in the next three years or so.

So-called unconventional oil – shale oil, tar sands and biofuels – are the most controversial forms of the fuel, because they are much more carbon-intensive than conventional oilfields. They require large amounts of energy and water, and have been associated with serious environmental damages.
While some new conventional oilfields are likely to come on stream before 2020, they will be balanced out by those being depleted.

BP predicts that by 2030, the US will be self-sufficient in energy, with only 1% coming from imports, the company's analysts predict. That would be a remarkable turnaround for a country that as recently as 2005, before the shale gas boom, was one of the biggest global oil importers.

There has been a very strong and concerted public-relations effort to spin the recent shale energy plays of the U.S. as complete game-changers for the world energy outlook. These efforts do not square up well with the data and are creating a vast misperception about the current risks and future opportunities among the general populace and energy organizations alike. The world remains quite hopelessly addicted to petroleum, and the future will be shaped by scarcity – not abundance, as some have claimed.

This series of reports will assemble the relevant data into a simple and easy-to-understand story that has the appropriate context to provide a meaningful place to begin a conversation and make decisions.

Since completing the Crash Course in October of 2008, much has gone as I anticipated in the way of money printing, official neglect of the main predicaments we face, and generally higher petroleum costs (2012 was the record so far on a yearly basis).

What has not changed is the general trajectory of liquid fuels becoming increasingly expensive and more difficult to produce. I know that this runs counter to virtually every news article that has come out recently. It is time to separate the data and facts from the hype. Much has recently been either muddied or presented so far out of context as to be more distortive than helpful.

Here is his chart (one of them, anyway):

Seems to contradict the other one, although note that the first chart indicates all energy sources (coal, natural gas, biofuels, nuclear (!) etc.), not just liquid fuels. You can't put coal in your gas tank. In any case, I don't see BP contradicting the fundamental narrative - because unconventional oil sources are so difficult to extract, produce and refine, the higher costs must be passed along to the end users. Because the cost of energy is high, and because the economy is entirely dependant on fossil fuels at its base, economic growth is constrained. Neither does it contradict that every source of fossil fuels, conventional or not, reaches a peak and enters decline at some point (note that this is not a theory; it is observable fact). And as the third paragraph of the first article states, it also means that climate change will probably sink us (what does that do to the biofuel forecast? and water...?). As Chris Martenson states:

What galls me at this stage is that all of the pronouncements of additional oil being squeezed, fractured, and otherwise expensively coaxed out of the ground are being delivered with the message that there's so much available, there's nothing to worry about (at least, not yet.) The message seems to be that we can just leave those challenges for future people, who we expect to be at least as clever as us, so they'll surely manage just fine.

But what it does mean is that the Peak Oil picture is complicated. And we like easy answers and simple narratives, don't we?

Wise estimates: "Using conservative estimates from a study on ethanol and corn prices, we find that from 2006-2011 U.S. ethanol expansion cost net corn importing countries worldwide $11.6 billion in higher corn prices with more than half of that cost, $6.6 billion, borne by developing countries." Of course, the high prices for corn hit the pocketbooks of low-income people in low-income countries the hardest.

It's been clear for awhile now that subsidizing the production of corn-based ethanol was primarily a subsidy that flowed to large agri-business concerns that grow and process most of the corn in the United States. These subsidies aren't just a costly and ineffective way of pursuing lower energy imports and reduced carbon emissions--they are also causing higher food prices and hunger for some of the poorest people in the world. They should be stopped.

When I took the introductory fine arts course in college (which actually was a tough course), one of the ideas that stuck with me was devolution. The instructors used that word in a very particular way, to apply to the changes that took place in late Roman art. Drill technology improved to the point where drills could be used to help create sculpture: they were faster and cheaper to use than chisels and hammers. But the results were cruder. It was easy to identify a late Roman bust: the curls and eyes were much coarser than in earlier Roman or Greek work.

Now it’s probable that drills, by making it cheaper to produce sculpture, allowed for more sculpture to be made. But I never heard that mentioned in that long-ago course, so I’m not sure. And I didn’t hear of a two tier market, with the more labor intensive, more finely crafted work being produced for a more discerning clientele, and the drill work being more of a mass product. The impression I had was that the new drill technology became a new normal, replacing the older methods.

It’s become fashionable to discuss the creeping decay in advanced economies, particularly the US, both in term of third worldification and end of empire. The more apocalyptic turn to theories of collapse from writers like Jared Diamond and Jacques Tainter. (note: I think she means Joseph Tainter-CH) But I think they miss one aspect that may prove to be important, that of how the pursuit of efficiency doesn’t always produce net gains, as economic theory might tell us. The measure of productivity, more stuff per unit input, misses how service/product quality can deteriorate. Some of this is deliberate: I have readers in comments regularly lament how old durable goods and tools were more reliable and lasted longer than contemporary versions. But there are other aspects of the downside of the willy-nilly pursuit of efficiency that have become so routine we accept these indignities and often don’t recognize them (unlike other ones that remain annoying years after the change, such as the widespread implementation of call routing and prompts in place of humans answering phones).

And Noah Smith reacts to a post from Umiar Haique (one of my favorite writers BTW) who says:

Consider this thought experiment. If you were really, really, really rich — say, not just part of the routinely opulent 1%, but a card-carrying member of the eye-poppingly decadent .01% — what part of your life would be American? If you had the money, I'd bet you'd drive a German car, wear British shoes and an Italian suit, keep your savings in a Swiss bank, vacation in Koh Samui with shopping expeditions to Cannes, fly Emirates, develop a palate for South African wine, hire a French-trained chef, buy a few dozen Indian and Chinese companies, and pay Dubai-style taxes.

Were to you have the untrammeled economic freedom to, I'd bet you'd run screaming from big, fat, wheezing American business as usual, and its coterie of lackluster, slightly bizarre, and occasionally grody "innovations": spray cheese, ATM fees, designer diapers, disposable lowest-common-denominator junk made by prison labor, Muzak-filled big-box stores, five thousand channels and nothing on but endless reruns of Toddlers in Tiaras — not to mention toxic mega-debt, oxymoronic "healthcare," decrepit roads, and once-proud cities now crumbling into ruins. Sure, you'd probably still choose to use Google on your iPhone to surf the web — but that's about far as it'd go.
How did we get here?

The mightiest adversary that snaps great empires like twigs isn't chimerical "globalization" — it's glittering hubris, bedecked in the finery of denial. Hence, if the whispered rumors of our imminent decline are worth leaning in and listening to, then perhaps it's worth trying to diagnose the depth of the plunge and the slope of the cliff before we scrabble for a handhold.

...Let me be clear. I speak not merely of America's structural current account deficit, sagging trade balance, or dearth of exports — but the possibility that America's greatest export might be the furious pursuit of mediocrity: a set of self-destructive expectations and preferences that, having not been good enough for America — having reduced the people formerly known as the middle class to penury, having rotted Baltimore and Detroit into cities that are beginning to resemble Kabul and Peshawar — probably won't be good enough for the world. Should the world cotton onto the not-so-happy ending of the story of dumb, opulence-driven McGrowth, then that recognition might be the rocket fuel that sends an American decline into liftoff.

Smith points out that it's our institutions that are really failing (emphasis mine):

Still - and I wouldn't have written this blog post otherwise - I think Haque does make a very good point. America does have a serious problem with our acceptance of bland mediocrity.

It's not our businesses or our products that are mediocre, it's our institutions. Our infrastructure, health care system, schools, and cities are, with a few exceptions, disgustingly mediocre. Haque mentions most of these. He makes a very good point.

Take a trip to Japan, and you'll be stunned at how easy it is to get anywhere. The train system is quiet, clean, comfortable, amazingly convenient, and runs on time. Even if you're out in the boonies and need to take a bus, those are much nicer than their American cousins. And it's nice to be able to use a bullet train to get from Osaka to Tokyo in three hours, without wasting two hours waiting for an airplane. (Note that these trains cater to the middle class, not the super-rich.)

Now, much of America is spread out, so it makes more sense to use care rather than trains in many areas. But our auto infrastructure, once the world's best, is decaying, and we're not spending the money to replace it. Meanwhile, in places where a Japan-style train system would make sense, I'm stuck paying $38 for a round trip to New York City on a train that averages about 30 miles per hour and uses old-fashioned paper punch cards. A better system would cost money that we are not willing to allow our government to spend. And it would require systemic reforms that we are not willing to allow our government to carry out.

Meanwhile, one has only to look at the international education rankings to know where we stand. A few simple reforms, like year-round school, increased teacher pay with more stringent qualification requirements, longer school hours, fewer vacation days, and increased ability to fire bad teachers, could probably bring us way up in the rankings. But we do not do these things. These things cost money that we are not willing to allow our government to spend. And they require systemic reforms that we are not willing to allow our government to carry out.

Our health care system, in contrast, is reknowned for its waste. In the case of health care, although the super-rich can enjoy the world's top surgeons, the average American gets worse health outcomes than Europe for a much higher price tag. We're willing to spend the money on health care, but we're not willing to bring in government to control costs.

And don't even get me started on urban blight. Just look at pictures of Detroit.

America's mediocrity does not stem from the failure of its companies. It stems from the failure of its governments - federal, state, and local. If we want to become an excellent country in all respects - if we really decide that we've had enough of mediocrity - it is our government which we must focus on improving.

What's Mediocre About America? (Noahpinion) I agree. And our institutions are failing because they're not run for the public good, which does not exist in America, but for profit by extractive rentier elites, a sure ticket to national failure.

In an earlier post about how we are now beginning to understand the role environmental pollution from lead played in rising crime rates, I wondered what other maladies that we are desperately tryng to solve through "innovation" are caused by the toxins introduced into our environment by previous innovations. Today, the New York Times has a couple of stories on that theme:

How much of the obesity crisis is caused by endocrine disruptors? Lead had been used for some four thousand years before we knew what that did to us.

I also wrote about the many innovations in concrete design: Self-healing concrete, air-purifying concrete, cement insuation. Now they have a developed a special type of "biological concrete" to create moss-covered green walls:

Scientists at a Spanish university are developing a new type of concrete that captures rainwater to create living walls of moss and fungi.

Unlike existing vertical garden systems which require complex supporting structures, the new "biological concrete" supports the growth of organisms on its own surface, according to researchers from Universitat Politècnica de Catalunya in Barcelona.

The concrete contains a biological layer that collects and stores rainwater, providing a moist growing environment where microalgae, fungi, lichens and mosses can thrive, they explain in a report.

A waterproof layer separates the organisms from the inner structural part of the concrete, while an outer layer acts in reverse, allowing rainwater in and preventing it from escaping.

The concrete also absorbs carbon dioxide in the atmosphere and acts as an insulating material and a thermal regulator, say the researchers, who are currently in the process of patenting the material.

The next step is to accelerate the process so that the mossy surface develops in under a year, they add.

Earlier I wondered if city living takes a toll on mental health. See this: Is Living In a City Making You Crazy? (Treehugger). And here's Lloyd Alter with some more data on how much of the food we produce is wasted: 50% of All Food Produced Is Wasted (Treehugger). Lloyd states, "The real point is that we don't have a food production crisis, we have a storage and transportation crisis and a consumption crisis." One qibble: we have both. He quotes from the report: "Controlling and reducing the level of wastage is frequently beyond the capability of the individual farmer, distributor or consumer, since it depends on market philosophies, security of energy supply, quality of roads and the presence of transport hubs. These are all related more to societal, political and economic norms, as well as better-engineered infrastructure, rather than to agriculture." That makes me wonder how the every-man-for-himself, anti-government, free-market libertarianism so popular today is going to solve this. The sad thing is, decreasing energy will make both yields and the infrastructure needed to reduce waste harder to implement at the same time.

Meanwhile, in Greece:

These days, plumes of smoke hover over Athens and other Greek cities, and citizens are complaining about sore throats and teary eyes, Der Spiegel reports.

It's one more consequence of the country's broken economy.

Heating oil is super expensive in Greece, for a few reasons. Taxes on oil went up last year as part of the country's austerity measures. On top of that, Greece has laws that protect the country's two refining companies and prevent competition, driving up prices, Bloomberg News recently pointed out.

"The Greek political system works for the insiders," one expert told Bloomberg. "If you're an insider, there will be an attempt to protect you. If you're a poor person ... you are on your own."

Yesterday, a group of doctors warned the Greek government that air pollution was at dangerous levels, according to Der Spiegel. Those most at risk were young children and the chronically ill.

Smoke Signal From A Broken Economy (NPR). Something to think about when someone says that "austerity" is environmentally friendly. And corrupt oligarchies seem to be synonymous with "democracy" almost everywhere you car to look:

Yes, in Greece we have a dysfunctional public sector; for the past 40 years the ruling parties handed out government jobs to their supporters, regardless of their qualifications.

But the real problem with the public sector is the tiny elite of business people who live off the Greek state while passing themselves off as “entrepreneurs.” They bribe politicians to get fat government contracts, usually at inflated prices. They also own many of the country’s media outlets, and thus manage to ensure that their actions are clothed in silence. Sometimes they’ll even buy a soccer team in order to drum up popular support and shield their crimes behind popular protection, as the drug lord Pablo Escobar did in Colombia, and as the paramilitary leader Arkan did in Serbia.

In 2011, Evangelos Venizelos, who was then the finance minister and is now the leader of the socialist party, Pasok, instituted a new property-tax law. But for properties larger than 2,000 square meters — about 21,000 square feet — the tax was reduced by 60 percent. Mr. Venizelos thus carved out a big exemption for the only people who could afford to pay the tax: the rich. (Mr. Venizelos is also the man responsible for a law granting broad immunity to government ministers.)

Such shenanigans have gone on for decades. The public is deprived of real information, as television stations, newspapers and online news sites are controlled by the economic and political elite.

Greece's Rotten Oligarchy (New York Times). The rich exempting themselves from taxes (because it's they who make the rules) was also a contributor to Rome's fall.